TransCanada's legal action after U.S. rejection of Keystone XL pipeline spurs mixed reaction

Reaction is pouring after TransCanada announced its intention to seek legal action against the Obama administration following the rejection of the Keystone XL pipeline in November.

Calgary-based company seeking $15B under NAFTA challenge

The Keystone XL pipeline, which became a focal point of environmental protests, would have shipped bitumen from Alberta's oilsands through a pipeline hub in the Hardisty area to U.S. Gulf Coast refineries. (Jose Luis Magana/Associated Press)

Reaction is pouring in Wednesday after TransCanada announced its intention to seek legal action against the U.S. administration following the rejection of the Keystone XL pipeline in November.

Calgary-based TransCanada says it hopes to recover $15B in potential lost revenue through a North American Free Trade Agreement (NAFTA) challenge if the pipeline does not go ahead.

The company also filed a lawsuit in a U.S. Federal Court in Texas, which is not damage-driven but instead seeks to declare U.S. President Barack Obama's decision to reject the project was without legal merit.

U.S. President Barack Obama rejected the Keystone XL pipeline Nov. 6., stating it was not in the interests of the United States. (Evan Vucci, Nati Harnik/AP)

Energy lawyer

A Calgary lawyer specializing in energy and pipeline regulations says there is merit to TransCanada's arguments.

"The company would definitely have some ammunition, the manner in which President Obama had dismissed the project … was a bit surprising," said Lawrence Smith of Bennett Jones.

"He based it on dirty oil, he indicated that this was not the way they wanted to proceed in the post-Paris accord era. All that on the face of it is discriminatory."

Hudson Institute

A fellow with a Washington-based think-tank says the move by TransCanada may have been more effective once Obama was out of office.

"TransCanada, by launching this case, is going to basically stop all dialogue between the two governments on pipelines and projects like this and that's going to continue even after there's someone new in the White House," Chris Sands of the Hudson Institute said.

"The easier thing would have been to wait until there was someone new in the White House and then they could reapply for a presidential permit and depending on the individual, get a quicker result."

Some environmental groups, landowners and First Nations collectively slammed the legal actions as "the corporate equivalent of a temper tantrum."

Bill McKibben of says TransCanada's actions reinforce why trade agreements can put profits ahead of people.

"The idea that some trade agreement should force us to overheat the planet's atmosphere is, quite simply, insane," McKibben said.

"But the oil industry is so used to always winning that I fear this kind of tantrum is predictable. Corporate power is truly out of control."

South Dakota landowner

A South Dakota landowner says the actions amount to corporate bullying.

"Why sue if they are still planning on building?" Paul Seamans said. "TransCanada bullies landowners, they bully the states and now they bully the federal government."

Indigenous Environmental Network

A Minnesota-based Indigenous rights group says the NAFTA challenge is an act of desperation.

"TransCanada has already lost the battle to get this dirty tar sands pipeline built," said Dallas Goldtooth of the Indigenous Environmental Network.

"It is merely a desperate measure to have U.S. taxpayers pick up the tab on their failed investment," he added.

Alberta government

The Alberta government says the decision will not affect a strong relationship between the two trading partners.

"NAFTA has an established formal arbitration process in place to handle this type of dispute," Brad Hartle, a spokesperson with the province's energy department said in a statement.

"Alberta's trade with the U.S. is critical to our prosperity and we look forward to continuing to collaborate with our U.S. partners to create jobs and grow the economy on both sides of the border."

But the 2016 U.S. presidential election will play a big part in pipeline's future. All Republican contenders have declared their support for it, while the two leading Democrats — Hillary Clinton and Bernie Sanders — oppose it.


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